Before considering buying shares of Asahi Diamond Industrial Co., Ltd. (TSE:6140) for its upcoming dividend, there are three essential checks investors should conduct:
Ex-Dividend Date and Record Date:
Asahi Diamond Industrial is set to go ex-dividend in the next two days, with the ex-dividend date occurring one day before the record date. Shareholders must be on the company’s books before the ex-dividend date to receive the dividend. To qualify for the upcoming dividend payment on June 28th, investors need to purchase Asahi Diamond Industrial shares before March 28th.
Dividend Sustainability:
The company’s next dividend payment will be JP¥15.00 per share, with a trailing yield of 3.1% based on the current share price of JP¥977.00. However, it’s crucial to assess whether Asahi Diamond Industrial can afford its dividend and if it has the potential for growth. Last year, the company paid out 95% of its income as dividends, which is considered high, especially if reinvestment in the business is necessary. Additionally, Asahi Diamond Industrial paid out more free cash flow than it generated, raising concerns about the sustainability of the dividend.
Earnings and Dividend Growth:
Examining the company’s earnings and dividend growth over time provides insight into its future prospects. Asahi Diamond Industrial has seen an 8.6% annual growth in earnings per share over the last five years, although it pays out more of its profits than desirable for long-term sustainability. Despite this, the company has delivered 4.1% dividend growth per year on average over the past decade, indicating a commitment to sharing growth with shareholders.
In Conclusion
While Asahi Diamond Industrial may offer dividends, investors should proceed with caution due to concerns about dividend sustainability and profitability. It’s essential to conduct thorough research and consider potential risks before making investment decisions.
